Blog#42: in-depth analysis of Hillary Clinton’s economic speech

Hillary Clinton gave her long-awaited economic speech this week. It fell far short of the progressive pivot she’s been attempting to make since last fall. The video and transcript of her speech are available here.

Most notable about this speech is its most glaring omission: any mention of banking reform. Why did Clinton’s speech fall so short of its substantive target? The short answer is this one: you cannot claim to be someone you never were. In “I’m not ready for Hillary,” I wrote:

Banking Reform

It will be very difficult for center and left of center Democrats to take Hillary seriously if Larry Summers’ economic policy is how she plans to execute a hard left pivot. Clinton continues her long-standing association with the Bob Rubin crowd and her dependence on millions of dollars in contributions from the financial sector remains unabated. With Elizabeth Warren and others calling for the reinstatement and expansion of the same Glass-Steagall banking legislation Bill Clinton repealed in 1999, it is hard to imagine Clinton suddenly signing on to its re-enactment into law with any kind of credibility. Just as unimaginable is Larry Summers overseeing, again, any tweaking of the legislation he had a part in repealing. Banking legislation similar to or stricter than Glass-Steagall is key in avoiding a repeat of the near financial collapse of 2008.

Sure enough, Clinton made no mention of reinstating Glass-Steagall or even somehow gluing back in banking regulators’ fangs to prevent a repeat of the financial disaster that caused the Great Recession. You may ask, how could she have reasonably called for reinstatement when she and her husband are still so closely associated with Wall Street? Well, she has said on more than one occasion that this isn’t 1999. Without quibbling about the details of it again here, it is noteworthy that Bill Clinton has now twice said that he made “mass-incarceration worse.” So, why not also regret repealing Glass-Steagall while the Clintons are at it? The answer lies in the fact that her strongest allies and financial backers of her campaign are in the financial sector and those who are in charge of writing economic policy and, presumably will run it, also come from that same pool of talent. While one might be tempted to blame Citizens United for the Clintons’ need for such patronage, the truth is that their ties to the banking sector go all the way back to the Clintons’ activities in Arkansas and grew from there.

Clinton, who, in her speech, focused a great deal on the middle class, didn’t specifically mention those who fell out of it due to the Great Recession and haven’t yet benefited from what she termed “an economy that still isn’t delivering for them.” In typical 90’s feminist style, the way Clinton talked about the middle class this week was more applicable to its upper echelons, and reminiscent of one of Bill’s early stump speeches of his first presidential campaign. Her speech almost completely ignored the realities of a middle class that has shrunk considerably since Bill’s first campaign, and certainly since the last Democratic primary. Sure, she said the words “gig economy” in a rather clumsy illustration of its meaning, and she did make specific mention of the “regular people” she sat down with in her travels, but such talk rang hollow. Those are, very clearly, terms she is unused to uttering, much less thinking in terms of. One gets the sense that she would be hard-pressed to name people in her circles who have to hustle in the gig economy. This is in stark contrast to Bernie Sanders whose facility for the same kind of storytelling is more natural and genuine-sounding. You can feel he knows the people he represents. When read, Clinton’s speech belies the lack of a true sense of what life is really like for so many people who can no longer consider themselves a part of the middle class, or those who are still in it but whose level of comfort is diminished. For someone who’s had seven years to ponder and prepare for this presidential gig, she seems ill-prepared and out of touch with a large segment of the audience she must speak to.

Those for whom the “economy isn’t delivering” are not a homogeneous group. I split them into five distinct groups:
– Middle-aged workers (now nearing or at age 50)
– Elderly workers
– Middle-class African Americans of all age groups
– Working class African-Americans
– Women as a group, and women of color
– Parents as a group, and single parents in particular
– Recent college graduates
– Youth unemployment, particularly among minorities

Mrs. Clinton did not address, or even so much as acknowledge, the millions of formerly middle class Americans who were laid-off at the start of the Great Recession and, due to the combination of jobless recovery, offshoring of jobs, and ageism, have not resumed their careers. Many of those workers were nearing or at middle age. By now, they are nearing their fifties and still aren’t anywhere near retirement age. What economic remedies does she have for them? Does she even realize they exist?

Except for an example of a grandmother watching children and earning a meager income from it, Mrs. Clinton did not address the problem of Americans who are not old enough to retire or whose social security benefits are insufficient to support their basic needs. Affordable housing is very scarce to nonexistent in most cities and, due to the housing crisis, the rental market has seen sharp increases in prices. These changes have had profound effects on how families live and the rate of marriage and births have seen a decline as a result.

African Americans have taken the brunt of this Great Recession, with unemployment rates double that of white Americans that persist to this day. When it comes to loss of wealth, African Americans have lost the most and regained the least, especially in the aftermath of the housing crisis, with middle class Black homeowners being nearly wiped out in traditionally Black Prince George’s County, Maryland, for example:

“But today, the nation’s highest-income majority-black county stands out for a different reason — its residents have lost far more wealth than families in neighboring, majority-white suburbs. And while every one of these surrounding counties is enjoying a strong rebound in housing prices and their economies, Prince George’s is lagging far behind, and local economists say a full recovery appears unlikely anytime soon.”

Unemployment among college-educated African Americans is almost double than that of their white peers.

Black youth unemployment, which Clinton did briefly mention, is higher than the imprecise “quarter of young Black men” figure she quoted. Bernie Sanders has been speaking out on Black unemployment at all of his events and quoting the EPI’s figure of 51% unemployment among young Black men. That figure corresponds to the U6 unemployment number published by the Bureau of Labor statistics that includes those who are actively looking for work, or are underemployed, or discouraged but still looking, and is restricted to high school graduates.

In her speech, Mrs. Clinton uttered “Black” only once, in connection to any segment of the Black population. Black women were not mentioned at all.

Which brings me to the topic of women and Clinton’s feminist agenda as the feminist candidate. It has long been the contention of feminists that one of the many problems of the Feminist movement in America is that it speaks to and has benefited upper middle class white women. Another contention has been that Black women and women of color have been cut out of the feminist movement. I should remind readers, on the day that we celebrate Ida B. Wells’ 153rd birthday, that if feminism hasn’t met the needs of poor white women in recent memory, it most certainly never even addressed those of women of color. Coincidentally, in an interview with a Black publication a few weeks ago, Gloria Steinem said feminism was invented by Black women. Hillary should have listened to that interview or someone among her staff should have brought it to her attention. As a former activist in SNCC, Bernie Sanders needs no reminders. He is in tune with feminism and the issues women of color face that white women don’t have to worry about.

“As was detailed in the recently released report,“The State of Black Women in America, 2015″, Black women have uniquely suffered throughout the entire recovery period. In fact, in the initial years of the economy’s bounce back, Black women were routinely pushed out of jobs as others made their way back into the nation’s economy. The tendency was so great, that more Black women lost jobs in the first two years of the recovery, than was the case during the entire Great Recession itself.”

Clinton’s speech spoke neither to poor white women (including those who are formerly middle class), Black women, or women of color in general. These groups lost a tremendous amount of ground to the Great Recession. While Clinton made mention of childcare, it was only in the context of affordable childcare; not preschool for all or free childcare of any kind. Of note is the fact that in the same breath as affordable childcare, Clinton was very careful to note that employers and small businesses should not be burdened with the cost. This is in very stark contrast to Bernie Sanders’ Scandinavian approach where free childcare is at the heart of social policy, and most definitely feminist-friendly.

There are many analysts who routinely credit Clinton with some kind of track record when it comes to women and minorities, but upon close examination, the record isn’t clear. It was disappointing that Clinton did not take advantage of her hour-long speech to put whatever feminist chops she has on display to score some easy points. This makes Max Sawicky’s take on the speech all the more interesting, as he covered Hillary Clinton’s very out of date ideas on how to help the Black community:

The commitment to full employment is another one of those things that everyone is always for. Or nearly everyone. How to do it? I don’t think she has the goods on this one. In her prepared text we can still see some phobic references to the national debt. There are references to the 90s boom, with the implication that it was due to deficit reduction. Wrong wrong wrong. She gets the relevance of tight labor markets, which is crucial, but how to get them?

I have to laugh, or cry, when I think back to the chatter that Bernie doesn’t care about black folks, and HRC does. Her remedy for the ‘hood is “empowerment zones,” which is Ronald Reagan/Jack Kemp bullshit. I could also note with displeasure her 50s nostalgia about how great the middle class had it, since the greatness was limited to white people.

The speech is being played as providing a concession to Bernie Sanders with a commitment to ‘fairness,’ while also nodding to the center with an affirmation of the centrality of growth. The former is said to be dependent on the latter. To the contrary, as a narrowly economic matter, OF COURSE we could have more ‘fairness’ right now at the same level of economic output. This would seem to make fairness contingent on future growth, which is not looking spectacular at the moment.

When it comes that part of Clinton’s vision that assures the listener that she has a firm a grasp of our economic reality as it is now, especially when it comes to wages, the return of lost jobs in general, one can suss out from her general prescriptions that she is talking about a return to Clinton I and II prescriptions and not rewriting the rules according to the Roosevelt Institute report by Joseph Stiglitz that her vision is supposed to be based on. Last fall, Joe Stiglitz met with Clinton and as Glenn Thrush reported:

Nobel Laureate Joseph Stiglitz had a one-on-one meeting with Clinton last December to discuss his aggressive progressive agenda, pushing for deep tax cuts against the wealthy and pay cuts for CEOs. She already knew the subject inside out, he told me, and probed him for details on how some of his proposals could be implemented. Like most of the economists and advocates she’s met with recently, Stiglitz left satisfied he’d gotten a fair hearing, but with no concrete commitment.

Joseph Stiglitz’ release of a very short statement following Hillary’s speech confirms that there is a reason for the lack of as concrete a commitment to Stiglitz’ economic prescriptions from Clinton and her economic team as he did from Bernie Sanders’: it was never really in the cards; certainly not with Larry Summers on board.

Another key economic component, one that the next president will have to grapple with was notably absent from Clinton’s speech. There was absolutely no mention of affordable housing, when affordable housing is at the very top of concerns for all young people, along with student debt, lack of full-time jobs, and wages that are too low to support independent living. Affordable housing also figures at the very top of the list of concerns for families, particularly the millions who lost jobs and homes at the start of the Great Recession and have yet to recover from the loss of either or both. I covered the affordability of housing here recently. There isn’t a major city that doesn’t suffer from a severe shortage of affordable housing.

Mrs. Clinton mentioned raising the minimum wage only once in her speech and she did not specify any amount for it. This is a matter of controversy since she called in to a rally in support of food workers’ demands for a raise to $15 an hour, but her closest aides deny that she would officially back anything higher than $12 an hour. This is the same kind of tactic she has employed, seeming to support a cause without officially endorsing it. Bernie Sanders has been unequivocal about his support for a living wage, and not merely a minimum wage that doesn’t meaningfully support people’s basic needs. Whether it is $10.10 or $12 an hour, it doesn’t really matter. There really is no part of America where someone earning such a wage could call it a living wage without working at least two jobs.

When it comes to jobs that have left the US economy, Clinton offered no explanation or prescription for either bringing them back, if she believes they can be brought back or, alternatively, some explanation of how her policies would change what is now an entrenched practice of extracting every last bit of profit for immediate transfer to the top. She made no mention of reforming the regulations that pertain to guest workers. This would have been very low-hanging fruit for her as we just had the experience of Disney firing workers with the intent of replacing them with H-1B visa guest workers, only to reverse their decision once it became public. Disney is a very small but illustrative example of how hundreds of thousands of workers are kept out of jobs that, by right as citizens, should be theirs. Clinton, in one short sentence, said she would push for “business tax reform to spur investment and close loopholes that reward companies for sending jobs and profits overseas,” but as anyone who follows economics knows, we are long past that kind of mild reform and, as Joe Stiglitz’ work at Roosevelt Institute calls for, in need of rewriting the rules of economics in order to be ready. While there was vague mention of making changes to regulations, how those would be achieved with the current makeup of Congress was left unexplained. One thing is clear, however, and it is that there is no departure from Clintonian trade policies of the past. Hillary has yet to either completely denounce the TPP or completely embrace it.

This rewriting of rules requires an in-depth look at the political and economic landscape of America. That landscape follows the historical path our nation has been on since its inception, with roots firmly entrenched in a past that begins in slavery. To deny that past is to deny a present in which inequality is forcing a new kind of order, one in which a relative few benefit from extracting from millions who have nothing but the labor they can provide, in return for little to no compensation. While, technically, this isn’t slavery, the philosophies and ethics involved in the harsh new economy are clearly unfair and unequal, and derived directly from the days of slavery. The only difference is that those philosophies encompass a far wider population than before that, while still is clearly defined by race, now also traps far more of the newly created lower classes.

While economic analyses are now rife with talk of automation, the global economy, and other reasons why how regular people earn a living will be very different in the future, there are realities we cannot lose sight of. Choices have been made, especially in the last twenty years, that brought us to the point where we have become a service economy. In an extraordinary piece of analysis, “How The American South Drives the Low-Wage Economy – Just as in the 1850s (with the Dred Scott decision and the Fugitive Slave Act), the Southern labor system (with low pay and no unions) is wending its way north,” Harold Myerson of The American Prospect reteaches us lessons from our history and puts them in rare context. Here is an excerpt from the beginning of his piece:

The South’s current drive to impose on the rest of the nation its opposition to worker and minority rights—through the vehicle of a Southernized Republican Party—resembles nothing so much as the efforts of antebellum Southern political leaders to blunt the North’s opposition to the slave labor system. Correspondingly, in the recent actions of West Coast and Northeastern cities and states to raise labor standards and protect minority rights, there are echoes of the pre–Civil War frustrations that many Northerners felt at the failure of the federal government to defend and promote a free labor system, frustrations that—ironically—led them to found the Republican Party.

It’s the resilience of the Southern order and the similarities between the Old South and the New that are most surprising—at least, until we disenthrall ourselves from a sanitized understanding of that Old South. It’s taken nearly 100 years for the prevailing image of the pre–Civil War South to become less subject to the racist falsifications that long had shaped it. The malign fantasies of 1915’s The Birth of a Nation and the Golden Age hooey of 1939’s Gone with the Wind have given way to the grim realism of 12 Years A Slave. Through all its incarnations, however, the antebellum South has retained its status as a world apart from the rest of America, whether (as D.W. Griffith would have it) for its chivalry or (as the historical record shows) its savagery.

Southern exceptionalism has also extended to the views of the South’s place in—or more precisely, its purported absence from—the development of the modern American economy. The slavery-saddled South was often considered the quasi-feudal outlier in the early—and presumably Northern—development of 19th-century American capitalism. While finance and factories rose north of the Mason–Dixon Line and railroads spanned the Northern states, the South was an island—with just a sprinkling of banks and rails and virtually no factories at all—largely detached from industrial capitalism’s rise.

In just the past year, however, a spate of revisionist histories has made significant additions to the historical literature that persuasively dispels this image. To be sure, the South was short on factories, trains, and banks, but its brutally productive slave economy spurred the development of the first factories of the industrial age, the textile mills of Massachusetts and Manchester, England, and the railroads that moved their goods. It was also key to the creation of modern finance and such pioneering industrial financiers as the Baring Brothers in Britain and the Brown Brothers in New York. Empire of Cotton by Harvard University historian Sven Beckert, which won this year’s Bancroft Prize, and The Half Has Never Been Told by Cornell University historian Edward Baptist, which won this year’s Hillman Prize, both document how the industrial and financial capitalism of the 19th century arose as a direct result of the conquests, expulsions (of Native Americans), and enslavements that turned the Deep South into a vast slave-labor camp that generated unprecedented profits for manufacturers and bankers who lived hundreds or thousands of miles from the Mississippi Delta.

I highly recommend, at this point in your reading, scrolling back and opening a page to this incredible long-read from Meyerson. Read it on-screen, save it as a PDF file, or print it. But, please, whatever you do, do READ it and then share it.

A service economy cannot sustain a country the size of the United States. American voters need to understand this and set their criteria for their next leader, first and foremost, according to their sense of who understands our situation best and how tough they will be in insisting on their agenda, against what will likely be even tougher resistance and obstruction than President Obama has faced. This means that not only is the choice of president crucial, but as crucial this time around, is ensuring he or she has a Congress that stands united firmly behind him, and acts, in unison, both as shield and compass as the need to recenter and refocus arises. That is *not* what President Obama got from either voters or his fellow Democrats in either house.

In her speech, Mrs. Clinton used her new granddaughter as the thematic springboard from which to discuss improving the lot of young people, but she did not list any specific goals in any particular area except for the cost of college. This is unsurprising, given the Clintons’ role in the birth of the charter school movement, but somewhat disappointing just days after receiving the endorsement of one teachers’ union, at a time when public education is still very much under assault. This too is one of the issues related to feminism. For one, women comprise a rather significant portion of the teaching profession and, I suspect, the teachers’ unions.

Given the fact that both houses of Congress are under Republican control, it would behoove all Democratic candidates to support solidly liberal and progressive democrats in local, state and national races across the country to increase voter interest and involvement in party politics. Whoever comes out the winner, whether it is Hillary or Bernie, will absolutely need to have a majority in order to fully implement their agenda. Failure to retake either or both houses, as soon as possible, will doom that president to a presidency hobbled by the continued obstruction of a disciplined and recalcitrant Republican opposition.

Overall, I grade this speech a C-. While, this early in a campaign, I had no expectations of a very detailed economic speech, I did expect to get a much better display of the candidate’s grasp of the depth and scope of the economic challenges different groups of Americans experience, along with a more defined set of policy guidelines to remedy these problems. This speech achieved neither, while it omitted significant portions of the voting public whose votes Clinton will depend on.

Additional sources and notable analyses of the Clinton economic speech:

Hillary Clinton won’t propose reinstating a bank break-up law known as the Glass-Steagall Act – at least according to Alan Blinder, an economist who has been advising Clinton’s campaign. “You’re not going to see Glass-Steagall,” Blinder said after her economic speech Monday in which she failed to mention it. Blinder said he had spoken to Clinton directly about Glass-Steagall.

This is a big mistake.

It’s a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall. Many will recall that her husband led the way to repealing Glass Steagall in 1999 at the request of the big Wall Street banks.

It’s a big mistake economically because the repeal of Glass-Steagall led directly to the 2008 Wall Street crash, and without it we’re in danger of another one.

Matthew Yglesias, in two posts in Vox, states that Clinton is more liberal than either her husband or President Obama, but doesn’t substantiate his claim. In his piece, Hillary Clinton’s new paleoliberalism, Yglesias makes some very general statements based on advance information on the speech, but nothing one can evaluate against any evidence. Then, in a follow up piece on bank prosecutions, you will find not one mention of Glass-Steagall, which is rather curious since the piece is about Hillary Clinton adopting Elizabeth Warren’s main criticism of President Obama and having regulators go after banksters. But, without reinstating the regulations under which those regulators would, presumably, be bound to act, there is no reason to believe that regulators would be any more inclined to prosecute than they have these last seven years, especially with Lawrence Summers as a cabinet member in a Clinton administration. Remember, Glass-Steagall was repealed under Larry Summers and Bill Clinton. Incidentally, Elizabeth Warren called, again, for the reinstatement of Glass-Steagall the very next day. So, Matthew Yglesias’ piece has no basis.

Paul Krugman has been oddly silent. He hasn’t devoted any blog space to Hillary Clinton’s first major economic policy speech.

Eduardo Porter’s analysis in the New York Times is a detailed and robust one, full of charts and statistics:

Mrs. Clinton’s collection of proposals is mostly sensible. The older ones — raising the minimum wage, guaranteeing child care to encourage women into the labor force, paying for early childhood education — have a solid track record of research on their side. The newer propositions, like encouraging profit-sharing, also push in the right direction.

But here’s the rub: This isn’t enough.

It is critical to remember that, for all its riches, the United States lags behind the community of advanced nations in building a society that could cope with the harsh new global economy.

Not only does the American economy suffer from one of the least skilled work forces, according to the O.E.C.D. The American political system has not done enough to build a social insurance apparatus to help everyday workers and their families sustain prosperous lives.

The consequences of these shortcomings have been disastrous. They underscore the real nature of America’s problem. It is not a lack of ideas about how to improve the lives of workers. It is the lack of political will to put them in practice.

On the related topic of Black unemployment, here is an excellent blog post by Jared Bernstein on an answer given by Fed Chair Yellen. How this relates to the topic at hand is that Bernie Sanders has covered this particular set of injustices in great detail in his stump speeches, even when the audience was overwhelmingly white, as it was in Madison, Wisconsin. Institutional racism is something Sanders understands far better than any other white politician with the possible exception of Congressman Steve Cohen of Tennessee who represents a majority Black district:

“Her response (beginning with her characteristic “so”):

“So, there really isn’t anything directly that the Federal Reserve can do to affect the structure of unemployment across groups, and unfortunately, it’s long been the case that African-American unemployment rates tend to be higher than those of on average among — in the nation as a whole. It reflects a number of different sources of disadvantage that are operative there.”

What’s missing here—though it was probably implicit in Yellen’s thinking—is the critical observation that black unemployment tends to be twice that of the overall rate, and more than twice the white rate. Moreover, this level difference translates into change differences such that a one percentage point decline in overall unemployment often leads to a two point decline for blacks. See here for more details, e.g., “black unemployment has averaged almost twice that of overall unemployment since the monthly data begin in 1972 (average: 1.9, with standard deviation of 0.15, so not a ton of variation around that mean).”

In that sense, the Fed has the potential to make a huge structural difference in the economic lives of blacks and other minorities by heavily weighting the full employment part of the their mandate relative to the inflation part, especially since there’s still considerable slack in the job market, with lower-wage, minority workers facing the brunt of it, and—importantly—little evidence of inflationary pressure (if anything, the Fed has missed their inflation target on the low side for a few years running now).

“So,” as Chair Yellen might say, it would have been useful to acknowledge this structural relationship and the importance to black workers of getting the “weights” right at this point, emphasizing the critical role of the Fed in holding off on tightening too soon such that the recovery can reach those who still haven’t been lifted by it.

Chair Yellen well knows this 2:1 problem, and I take her comments to mean that there’s not much the Fed can do to change it, though, again, she needed to say that the Fed can tap it to the great benefit of un- and underemployed minorities. However, economist Bill Spriggs, who knows a lot about this, argues something that is true and important in this space—I know this because I’ve seen it with my own eyes, both in the data and in the anecdotes: at full employment, employers cannot afford to discriminate against minorities the same way they can in slack markets.

And what Bill will tell you is that this phenomenon has the potential to reduce that 2:1 ratio, which would be a tremendously beneficial structural advance.”

Reprinted with permission from Jared Bernstein. Click here to see his original post.